IBM CEO: It is the 'dawn of a new era' where computers think and make decisions

IBM CEO Ginni Rometty's eyes light up when she talks about the
future of IBM.

She's taking the company — and she hopes, the world — into a new
era of technology she calls "cognitive computing."

Cognitive computing is the thing after what all of
her competitors are chasing, she says.

IT companies including HP, Cisco, Dell/EMC, are all drooling over
a trend called "the digital company." That means: Out
with paper forms, in with mobile apps. All product gets sensors
and apps, including everything from cars to toothbrushes. Data is
generated everywhere, collected, and then mined for insights.

Data is to be understood, not just stored

"Digital, it is not the destination," she says. "Think
about when a digital business marries up with what I'll call
'digital intelligence.' It is the dawn of a new era about being a
'cognitive' business. When every product, every service, how you
run your company can actually have a piece that learns and thinks
as part of it, you will be a cognitive business."

IBM
WatsonBen Hlder / Getty
Images

She says IBM's super smart, talking, reasoning computer
Watson is "symbolic of this era. He is the first platform of it."

Rometty points out that "80% of all the information in the
world to date, until now, has been invisible to your systems
and computers. It's songs. It's movies. I mean you might store
them but [the systems] don't understand what's in them.
Until now."

But computers like Watson "can understand. They can reason.
They can learn," she says.

When you combine the ideas that all products and companies
are digital with computers that can understand all that digital
info, "you have this new era," of business, she says.

"Almost every product is going to turn into a service. It will be
based on analytics," she envisions.

Five ways 'cognitive' can change a business now

Rometty, always a fan of lists, says she sees five ways companies
will become "cognitive," and IBM is doing all of these
today:

1.Understanding your customers
better. An insurance company is using Watson to help
people fill out insurance forms. Watson is watching and
translating terms into language people can understand. The
insurance company has seen the closure rate increase 9 percent.
"9 points is enough to change an industry," Rometty says.

2. Turning every employee into an
expert. "The US spends $156 billion a year in
training in business. 90% of those skills are lost in the first
year. You just don't remember them," she said. What if you had a
smart computer that can watch and guide employees so that
"every employee in your company can perform as the best one."

IBM Watson powered toy by
CognitoyCognitoy

3. Products that automatically adapt to the person that owns
it. One of IBM's customers is a toy manufacturer that
uses Watson to make a toy dinosaur that "adapts to how
your child learns." But she thinks that every product and service
will use such analytics to adjust to their owners.

4. Managing the corporate supply chain. One of
IBM's customers is using Watson to analyze its supply chain. This
has lead to "2-10 points higher revenue and 5 points of
margin," she says.

5. Something Rometty calls
"discovery." That ranges from new areas to invest
in, finding potential new products to develop, or how you search
data. One example: IBM announced a partnership with Thompson
Reuters last week to put its catalog of business data on
Watson.